This document provides information on various types of retirement accounts available for small businesses, including SIMPLE IRAs, payroll deduction IRAs, SEPs, and 401(k)s. It summarizes the key details of each type of account, such as who can contribute (employer, employee, or both), contribution limits, reporting requirements, advantages and disadvantages. The accounts range from easier to set up, like SIMPLE IRAs and payroll deduction IRAs, to more complex plans like 401(k)s that require more administration but allow for higher contribution limits.

1. How to choose a
retirement
account
For Your Business

2. Choose
The right retirement account for you and your
employees in order to provide tax savings,
attract the best employees, and provide a
valuable benefit for yourself and your
employees.

3. types of accounts
available for businesses:

4. SIMPLE IRA
(Savings Incentive Match Plan for Employees)
A SIMPLE IRA is perfect for a small business
starting out, and allows for both employee
and employer contributions. SIMPLE IRA’s
are available to any small business with 100
or fewer employees.

5. SIMPLE IRA
(Savings Incentive Match Plan for Employees)
Contributions are mandatory for all
employees who have received at least
$5,000 in compensation during any 2
preceding calendar years, and are
expected to receive at least $5,000 in
compensation in the current calendar year.

6. SIMPLE IRA
(Savings Incentive Match Plan for Employees)
Who contributes:
Both employer and employee.
Contributions are mandatory
for employer,
but elective for
employee.

7. SIMPLE IRA
(Savings Incentive Match Plan for Employees)
Limits:
The employee
contribution cannot exceed
$12,000 for 2013, and 2014. All employees
aged 50 or over are also allowed a $2,500
catch up contribution.

8. SIMPLE IRA
(Savings Incentive Match Plan for Employees)
Filing Requirements:
No annual filing requirement with IRS

9. SIMPLE IRA
(Savings Incentive Match Plan for Employees)
Advantage:
Easy to set up and
maintain.

10. Payroll deduction
(IRA, Roth or Traditional)
Summary:
Under this plan, employees establish an IRA with
a financial institution, and start a payroll
deduction for it. A traditional IRA is tax-deferred,
while a Roth IRA is usually taxable in the year
contributions are made.

11. Payroll deduction
(IRA, Roth or Traditional)
Who contributes:
Employees only.

12. Payroll deduction
(IRA, Roth or Traditional)
Limits:
Maximum amount for
Traditional IRA is $5,500
for 2013, and additional
$1,500 for employees 50+, or employee’s taxable
contribution for the year.

13. Payroll deduction
(IRA, Roth or Traditional)
Limits:
Maximum amount for
Traditional IRA is $5,500
for 2013, and additional
$1,500 for employees 50+, or employee’s taxable
contribution for the year.
Roth IRA limits are based on Modified Adjusted Gross Income (AGI), and
may be reduced under certain circumstances and filing statuses.

14. Payroll deduction
(IRA, Roth or Traditional)
Reporting Requirements:
No filling
requirements with the
IRS

15. Payroll deduction
(IRA, Roth or Traditional)
Advantages:
Easiest of all retirement
programs to set up, with little or
no administrative cost.

16. SEP
(Simplified Employee Plan)
Summary:
This plan is funded solely by employer
contributions. The employer must give the same
percentage to all employees, but this percentage
amount can vary from year to year.
This amount is based only on the first $255,000 ($260,000 for 2014) of
their compensation.

17. SEP
(Simplified Employee Plan)
Who Contributes:
Employer Only

18. SEP
(Simplified Employee Plan)
Limits:
Employer contributions
to each employee’s SEP
IRA for the year cannot exceed the lesser of 25%
of compensation or $51,000 ($52,000 for 2014).
The maximum deduction you can take is 25% of all participants’
compensation up to $250,000.

19. SEP
(Simplified Employee Plan)
Reporting Requirements:
No annual filing
requirements with the
IRS.

20. SEP
(Simplified Employee Plan)
Advantages:
Amount the employer contributes can
change yearly, and the employer does
not have to participate every year.
Contributions to a SEP are tax deductible, and
investment earnings are not taxed.
A tax credit of up to $500 per year is allowed for each
of the first 3 years of starting up the plan.

21. SEP
(Simplified Employee Plan)
Disadvantages:
No participant loans are
permitted. Total contributions
to each employee’s SEP-IRA
are limited.

22. 401 (K)
Summary:
There are several types of 401(k) plans:
• Traditional
• Safe Harbor
• Automatic
• SIMPLE 401(k)

23. 401 (K)
Summary:
There is no limit to the number of employees
with most 401(k) plans, other than the SIMPLE
401(k) which is limited to 100 employees or
fewer.

24. 401 (K)
Summary:
There is no limit to the number of employees
with most 401(k) plans, other than the SIMPLE
401(k) which is limited to 100 employees or
fewer.
All employees 21 and over who have worked at least 1,000 hours in any
year must be offered this plan.

25. 401 (K)
Who contributes:
Employer and employees

26. 401 (K)
Limits:
The combined amount
of employee and employer
contributions is limited to
100% of compensation, or $51,000 (for 2013) and
$52,000 for 2014. Employees can defer up to
$17,500 (for 2013 and 2014).

27. 401 (K)
Limits:
Traditional 401 (k) plans- These plans allow eligible
employees to make deferrals through payroll deductions,
and employers have the option of making contribution on
behalf of all employees, matching contributions, or both.
Safe Harbor - This plan is similar to the Traditional 401
(k), but requires immediate vesting of all contributions. A
Safe Harbor 4401(k) plan is not subject to complex annual
non-discrimination tests that is required of the Traditional
401(k)

28. 401 (K)
Limits:
Automatic Enrollment - The employer contributes a
fixed percentage or amount to all employees enrolled
unless they opt out. This type of plan helps to pass or
avoid non-discrimination testing.
SIMPLE 401(k) plan - Employer is required to make
contributions that are fully vested, and is available to
employers with 100 or fewer employees who received at
least $5,000 in compensation in the previous calendar
year.

29. 401 (K)
Reporting Requirements:
Form 5500 must be
filed annually with
the IRS

30. 401 (K)
Advantages:
All 401(k) plans permit high level of
salary deferral, each employee can set
their own level of contribution, and employer
contributions are deductible up to limitation amount.
In addition, these plans include flexible contributions
and features, such as participant loans, hardship
distributions and a designated Roth Account.

31. 401 (K)
Disadvantages:
Most complicated of all retirement
plans. Several types of 401(k) plans
require annual IRS testing to
ensure non-discrimination.

32. References
• IRS Webcast on Retirement Plans
• Payroll Deductions for Small Business,
Publication 4587
• www.irs.gov/retirement
• Publication 4674 - Automatic
Enrollment 401 (k) Plans for Small
Businesses
• Publication 560 Retirement
Plans for Small Businesses

33. And Finally...

34. To learn how to
simplify the process of
running your business

35. By checking or
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